The billionaire founder of outdoor apparel brand Patagonia, Yvon Chouinard, has said he is giving away the company to a trust that will use its profit to fight the climate crisis.
Instead of selling the company or taking it public, Chouinard, who has a net worth of $1.2 billion, is transferring his family's ownership of the company to a trust and a non-profit organization.
"Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis," Chouinard said in an open letter published on the company's website on Wednesday.
"Instead of extracting value from nature and transforming it into wealth for investors, we'll use the wealth Patagonia creates to protect the source of all wealth," he added.
Patagonia will continue to operate as a private, for-profit corporation but the Chouinard family, which controlled the company until last month, no longer own the company, according to the New York Times, which reported the move earlier on Wednesday.
The company's voting stock is being transferred to the Patagonia Purpose Trust while non-voting stock had been given to the Holdfast Collective, a non-profit dedicated to fighting the environmental crisis and defending nature. The trust will be overseen by members of the family.
The New York Times said the structure of the Patagonia founder's action meant he and his family would get no financial benefit - and in fact would face a tax bill from the donation.
In a statement commenting on the move, Chris Moorcroft, partner in the private client team at Harbottle & Lewis said: “Yvon Chouinard’s decision demonstrates the increasing sense amongst wealthy families that their wealth should have a purpose, or to put it another way, that ownership of great wealth is a privilege that comes with a responsibility to ensure that the wealth is used as a force for good and positive impact – whether at the micro level or more widely for society and planet."
“As Patagonia’s new structure has shown, there is a very real opportunity that exists for trusts in general, and leading trusts jurisdictions, to help families cement their agreed purpose and values through the use of purpose trusts to own and administer assets. These types of trusts allow individuals to bake in principles that must be adhered to by trustees who can be held to account for deviating from those principles. These purpose trusts are likely to continue to grow in popularity over time," he added.
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